BOMBAY INDIA - Peugeot Auto-mobiles and its partner in India, Premier Automobile Ltd., are forging local supply agreements almost weekly in an attempt to make the plant profitable. PAL-Peugeot, or PPL, is in Kalyan, near Bombay. The US$230 million joint venture this year added the Peugeot 309. It also makes the Premier 118 and 138, derivatives of the Fiat 124.
To achieve profitability in two years, PPL must raise the rate of local content in the 309 to more than 50 percent, and improve productivity and quality.
The balance between the two models is crucial. The 118 and 138 earn enough to allow PPL to lose US$1,400 for each 309 made. The loss mainly is due to duties on parts from France, therefore PPL builds fewer 309s that it can. But the 309 now has 23 percent local content.
Jacques Manlay, PPL chief executive, said the factory will achieve 65 percent local content by the end of 1997.